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Tuesday, February 17, 2009

From slums to world-class city

World Bank holds Singapore up as model of development, pointing to its sound policies in urbanisation

By Aaron Low

THE World Bank has held Singapore up as a model of a country which managed to transform its slums and become a world-class city.

In its annual World Development Report 2009, the World Bank attributed this achievement to a government known for its accountability, meticulous planning and coordinated action.

The report discusses the relationship between geography and development and says that a key part of a country's success lies in implementing sound policies that develop economic activity.

It also observes that stopping people from rural areas migrating to cities can be counter productive as this can stifle innovation and growth.

But by instituting flexible regulations and versatile land use, policymakers can make urban areas attractive to firms and investors.

In illustrating these points, the 383-page report, published last November, highlighted the example of Singapore in one of its nine chapters.

When Singapore gained independence in 1965, the country was in dire straits as it faced massive overcrowding, a lack of public services and high unemployment, it noted.

Seven in 10 households were in badly overcrowded conditions, while a third of its people lived in squatter areas on the city's edges. An estimated 600,000 homes were needed, but only 60,000 were in private supply.

Unemployment was at a high of 14 per cent, gross domestic product (GDP) per capita was less than US$2,700 (S$4,000) and half the population was illiterate.

Mortality rates were rising rapidly while migration from Malaysia and the surrounding regions put increasing pressure on housing and employment.

Yet, just 40 years later, Singapore had overcome these and other problems to become 'one of the cleanest and most welcoming cities in the world'. It is also now one of the world's top centres of commerce.

With five million people packed into 700 sq km of space, Singapore's US$300 billion exports in 2006 was close to that of the Russian Federation, which is 16 million sq km, said the World Bank.

'Improving institutions and infrastructure and intervening at the same time is a tall order for any government, but Singapore shows how it can be done,' it said.

The secret of Singapore's success?

'First, institutional reforms made the Government known for its accountability. Then, the Government became a major provider of infrastructure and services,' the report said. 'Multi-year plans were produced, implemented and updated.'

The report highlighted the Housing Board's role in clearing slums, building public housing and renewing the urban landscape. At one point, the HDB was building a new flat every eight minutes.

As a result, nearly nine in 10 Singaporeans live in public housing, and most of them own their homes.

Through land acquisition laws, the Government acquired one-third of city land and slum dwellers were relocated to public housing.

'For a city-state in a poor region, it is also not an exaggeration to assert that effective urbanisation was responsible for delivering growth rates that averaged 8 per cent a year throughout 1970s and 1980s,' said the World Bank.

'It required a combination of market institutions and social service provision, strategic investment in infrastructure, and improved housing for slum dwellers.'

But the factors for its success also make Singapore an anomaly, as not all countries can have rapid economic growth and a 'focused government in power since 1965'.

Nor are many countries able to align priorities of country and city together, the way Singapore, as a city-state, can.

Singapore's transport policies were also cited by the World Bank.

It noted that cars cost four to five times as much as they do in the rest of the world because of the Certificate of Entitlement auction system and car taxes. This was an 'extreme but effective' way to optimise private car use.